Posts Tagged ‘James Robinson’

A sense of crisis is good for the world of thought it would appear. 2012 has been dominated by a continuing economic crisis – most particularly in Europe. There is not yet a sense that out of the wreckage of the old will emerge the new. And yet, in some of the books that have been published this year – some of which I have reviewed on Labour Uncut – there are fresh approaches that may provide hope.

The worldview of both the centre-left and the centre-right in the UK is astonishingly narrow. In many ways our political culture has become incredibly indulgent: narrow, short-term, parochial, interest driven, transactional and tactical. We only have to look at the debate about our future membership of the European Union to see that – it completely disregards the fact that we are hurtling towards irrelevance. Equally, the debate about our economic future is mired in the politics of the moment. Much of what is dressed-up as economic analysis is simply political positioning.

So it has been with relief that in our increasingly global market in ideas, research and debate, there are new ideas and perspectives if we choose to look for them. Other than fighting all the cuts on the left and fighting the EU on the right – both misguided in their own ways – where is the domestic vision for national recovery? If there is a defining feature of the UK’s politics in 2012, it is that we are embracing smallness and irrelevance with seeming self-righteous glee.

In modern times the political challenges have never been so great and the response from our leaders so poor. Perhaps more than anyone else, this is epitomised by the current chancellor of the exchequer who seems to think that national recovery is a political game. The game-players are not only on the government benches. But he, more than anyone else, symbolises the age of small politics in the midst of great challenges. Unless he and our political leaders shift course decisively then an era of British decline awaits. It is entirely avoidable.

In these books of the year, let’s hope that pathways to a bigger politics present themselves. I hope that Santa brings you enough book tokens to enjoy one or two of the following gems (in no particular order).

The future will be defined by the institutions we build. Acemoglu and Robinson take us a tour of economic development across six continents and unlock the key to development at “critical junctures.”.Breathtaking in scope and consequential.

Sachs has established himself as a leading critic of the new centre-left Keynesian orthodoxy. Good for him – someone has to push back against the use of Keynes to avoid real choices while conveniently ignoring the potential unforeseen consequences of much of what is proposed. But that’s not the strength of the book. The strength of this book is that he actually includes a costed plan for recovery and elimination of the primary deficit while investing in science, education, childcare, infrastructure etc.(more…)

In 1978, workers at the Scania factory in Sao Paulo went on strike in protest at the Government manipulating the rate of inflation meaning they were worse off than they had thought. Strikes had been illegal in Brazil since 1964. The metalworker union’s president was called in to convince the workers to return to work. He refused. Brazil’s long march to economic and political freedom had begun. The president’s name? Luiz Inatio Lula da Silva – “Lula”.

Critical to Daron Acemoglu and James A Robinson’s Why nations fail: the origins of power, prosperity and poverty is the notion that these events in 1978 are connected to today’s Brazilian prosperity. Their central argument is that prosperity is generated through inclusive political and economic institutions. They reinforce each other. A pluralistic political system tends to support private property, encourages investment and innovation, creates a level-playing field and prevents elites from extracting too much wealth. As long as you have sufficient centralisation to enable the rule of law, these are the circumstances in which nations develop and poverty is diminished.

Lula was part of a broad civic movement for democracy and social justice. Over time this movement enhanced pluralism within Brazil’s political system and cracked open its economy. The first local administration to be run by the Workers’ Party, Porto Alegre, introduced ‘participatory budgeting’ which consulted residents about spending priorities. Inclusive political institutions promote inclusive economic institutions which unleash creative destruction against privilege and monopoly.

The great trust-buster, Teddy Roosevelt, confronted the ‘Robber barons’ in the early twentieth century. He was responding to popular concern with their market power. America’s institutions enabled this transmission from popular discontent to action. The same would be less likely to happen in Yemen.

Two things distinguish Why nations fail the simplicity of its argument and the sheer range and scope of historical references. Acemoglu and Robinson cover the Roman Empire, the history of Ethiopia, Congo, Bolivia, Peru, Japan, India, China, Austria and many more.

They devote considerable attention to a small European nation called England. Our divergent path came through the colonisation of north America which emboldened a merchant class to insist on political reform. It all came to a head in the Glorious Revolution of 1688.

Acemoglu and Robinson are particularly adept at comparing starkly diverging destinies of seemingly similar locations that have been taken in different institutional directions: Nogales, Arizona and Nogales, Sonora; North and South Korea; the Bushong and Lele of Kongo; north and south London. OK, they don’t include north and south London but you get the picture.

The book is staggering, accessible but not without flaws. Its core thesis does become quite repetitive and this breaks its pace from time to time.